Suppose the Banking System's Nonborrowed Reserves Total $75 Billion with Total

Multiple Choice

Suppose the banking system's nonborrowed reserves total $75 billion with total legal reserves standing at $98 billion. The Fed buys $5 billion of securities in the open market. What will happen to the level of borrowed reserves?

A) The level of borrowed reserves will fall to $18 billion
B) The level of borrowed reserves will rise to $80 billion
C) The level of borrowed reserves will fall to $93 billion
D) The level of borrowed reserves will rise to $23 billion
E) Borrowed reserves will be unaffected